Survey of Emerging Market Conditions

Most Recent Quarterly Report

Executive Summary & Conclusions

Optimism for the Florida real estate market remains relatively strong this quarter despite the government shutdown that occurred during the fielding of this quarter’s survey. UF’s Commercial Real Estate Sentiment Index, an outlook on our respondents’ own businesses, declined slightly for the second consecutive quarter, but remains at a level equal to the first quarter of 2007.

These strong expectations are driven by an improving state economy. One of the main drivers of growth in Florida continues to be tourism. After a record setting year in 2012, Florida tourism has continued its record growth. The third quarter was no different as Visit Florida projected a record 22.9 million visitors to the state this quarter which is a 1.7% increase of the prior year and a new third quarter record. This has led to continued tourism related job growth, which has led Florida in job growth for 41 straight months.

Florida’s overall employment picture continues to show improvement. Florida’s unemployment rate has dropped over the third quarter to 6.8% which continues to outperform the U.S. All of Florida’s major cities have seen improvement in employment with Orlando showing the best performance, reaching 6.6% in September which reflects the tremendous impact of the tourism industry and its success. However, part of the statewide improvement in unemployment continues to be the reduction of the number of Floridians in the labor force with over 17,000 less this quarter. However, the state continues to add jobs, adding over 52,000 in the quarter. The biggest changes over the quarter occurred in: professional and business services; trade, transportation and utilities; construction; and leisure and hospitality. All are important segments to the real estate markets.

The continued improvement in the job market along with tremendous growth in the tourism industry have been positive for the real estate markets which continue to see improving fundamentals. However, uncertainty continues to play a part in tempering that improvement. The uncertainty created by government policy and inaction continues to prevent companies from moving forward aggressively with expansion.

In addition to the obvious issues with the federal government’s economic policies and spending habits, respondents expressed concern about the effects of the new flood insurance law implementation on the housing and commercial sectors in flood prone areas and about the effect of the affordable care act and its implementation at the end of this year.

The economic policies of the federal government are having a tremendous impact on the capital markets through its impact on interest rates. Despite the Federal Reserve’s intention to keep interest rates low, markets have been driving up the yield on the 10 year treasury. Fortunately, after an increase of 66 basis points in the second quarter the yield increased only 4 basis points in the third quarter due to the government shutdown and the impending debt ceiling debate. However, respondents continue to be concerned about the timing and speed of interest rate increases and their effect on the real estate market.

Consumers are also concerned about the uncertainty in the economy and in Washington and that continues to drive the UF BEBR consumer sentiment index lower. The index finished the third quarter at 76 down from its recent high of 81 at the end of June. The decline is being driven in part by younger Floridians who have higher unemployment rate than older Floridians. Additionally, we are seeing a decline in income as salaries are not keeping up with inflation.

Despite the uncertainties, Florida’s economy and therefore the real estate markets continue to improve and that trend should continue. The addition of two Amazon distribution centers and Hertz’s decision to move its corporate headquarters to Florida show that the environment in Florida in conducive to investment which will help continue the positive improvement in the state.

Results by Florida Market

Northwest Northwest Jacksonville North-Central East-Central Coast Orlando Lakeland-Winter Haven Tampa-St. Petersburg Sarasota-Bradenton Treasure Coast Palm Beach County Broward County Dade County Southwest Coast

Past Quarterly Reports:

About the Survey

The Survey of Emerging Market Conditions targets the experienced leadership and professionals of Florida's real estate development and investment community to gain insights and market intelligence on matters of fundamental importance to real estate practitioners and policy-makers across Florida.


The Survey of Emerging Market Conditions is the only Florida-centered survey of leaders and professional advisors in the real estate industry. It analyzes prospective data to produce extensive forecasting information pertinent to 37 of the state's 67 counties. The survey is administered by the Bergstrom Center for Real Estate Studies at the University of Florida.

With the highly fragmented nature of real estate, no survey can encompass all aspects of the real estate industry. To face this challenge, the Survey of Emerging Market Conditions employs a quarterly sounding from multiple groups of market leaders and professional groups advising them.


It is important to understand the unique strengths and limitations of the Survey of Emerging Market Conditions.

Like virtually all surveys of investment real estate markets, this survey gathers opinion. Thus, it distills complex judgments, and amounts to a carefully controlled and structured conversation with truly qualified real estate experts. The survey asks questions carefully designed to avoid ambiguities, a major problem in collecting complex information.

The survey screens respondents at two levels of refinement to assure truly expert opinions. First, only persons with established real estate credentials are invited to participate. Second, each respondent is asked to respond only for those localities and property types where he or she is an active expert.

The result is that all the data collected can be regarded as authoritative, no matter how small the sample of responses for a property type-locality "cell." (We maintain a minimum of at least four respondents for any market cell to guard against response mistakes.) In short, even data from the least actively covered markets that we report have value as an additional expert opinion. In the more actively reported market cells, our data represent an extraordinary consensus of the experts.

Survey results are anecdotal findings about required returns and investment objectives of owners and investors contemplating acquisitions or deciding about the timing of dispositions. Therefore the survey is a measure of current and prospective market perceptions, including the confidence levels exhibited by leading real estate professionals and market participants. In other words, the Survey of Emerging Market Conditions is a report of anticipated returns, business outlook and other forecasting views, rather than an analysis of actual or historical performance. The most valuable benefit for many may be interpretation of survey results over time to better comprehend market trends and shifts.

Glossary of Survey Terms

Cap Rates: Capitalization rates are the ratio of expected net operating income to actual transaction price. It is regarded as important that cap rates be based on actual transaction price rather than an appraised value.

Yield: For the Survey of Emerging Market Conditions, yield is before income taxes (pre-tax), and without debt financing (unlevered). It is the rate of interest that discounts all future property cash flows back to a present value equal to the original equity investment (acquisition cost).

Absorption Rates: Refers to the number of additional units of housing, office space, etc. that can be sold or leased in a given market area over a given period of time. For the purposes of the Survey of Emerging Market Conditions, the exact time interval, market area and measure of units are not of concern. Respondents are asked only to comment on the direction of change in the absorption rate.

Occupancy Rate: Two notions of occupancy rate are the percentage of a building's leasable space that is occupied and the percentage of a building's leasable space that is under lease. (Note that some leased space may not be occupied.) For the purposes of the Survey of Emerging Market Conditions either notion is acceptable since we are asking about direction of change in occupancy rather than levels of occupancy.

Rental Rate: The meaning of rental rate is extremely complex. In residential, it can include furnishings and utilities, or it can be net of all furnishings and utilities. With commercial property it can range from full gross rent, including janitorial services to "triple net," which excludes all operating expenses. Fortunately, for the Survey of Emerging Market Conditions this variation is a minimal issue. The survey asks respondents only about the qualitative direction of change in rental rates, however defined. Generally, the direction of change will not depend on the definition of rent.

Property Types

Property: A property is an individual asset that may include one or a collection of buildings (e.g., a business park or apartment complex). Parks, complexes, and neighboring buildings are considered one property.

The Survey of Emerging Market Conditions covers five broad property types: residential (single family, condominium and apartments), office, flex/industrial, retail and hospitality. Each property type is further divided into two or more sub-types.

  • Industrial: Primarily for industrial use, such as distribution, manufacturing or warehouse facilities. Flex refers to properties with a mix of office and industrial uses. Usually a single story, Flex space may be research facilities, technology/telecom facilities, or similar uses.
  • Office: Primarily used for office space. Office properties may have a small retail component (especially in CBDs on the street level), or a parking garage, or other attached uses.
  • Apartments: Includes all rental residential properties with more than four units.
  • Single Family: Includes single family detached, individually owned residences in structures with up to four units, and individually owned townhouses.
  • Condominiums: For the Survey of Emerging Market Conditions, includes all individually owned residences in structures with more than four units, and with facilities owned in common. Note that this excludes many townhouses.
  • Retail: The Survey of Emerging Market Conditions utilizes the ICSC's definitions of retail assets as either shopping centers (strip or enclosed malls) or free-standing stores.
  • Condo Conversion: Property that was purchased with intent of converting individual units to condominium ownership.

Major Florida Markets

The Survey of Emerging Market Conditions aggregates 37 of Florida's 67 counties into the top 13 Florida markets. Counties comprising each major Florida market as follows:

  • Miami-Dade County
  • Broward County
  • Palm Beach County
  • Treasure Coast (Indian River, Martin & St. Lucie Counties)
  • Southwest Coast - Southwest Florida area (Charlotte, Lee & Collier Counties)
  • East Central Coast - Daytona Beach, Melbourne-Titusville-Palm Bay (Volusia & Brevard Counties)
  • Orlando - Central Florida area (Seminole, Osceola, Lake & Orange Counties)
  • Lakeland-Winter Haven (Polk County)
  • Tampa-St. Petersburg - Tampa Bay area (Hillsborough, Pasco, Hernando & Pinellas Counties)
  • Sarasota-Bradenton (Manatee & Sarasota Counties)
  • Jacksonville - Jacksonville (Duval, Nassau, St. Johns, Baker & Clay Counties)
  • North Central (Alachua, Marion & Gilchrist Counties)
  • Northwest Florida - Pensacola, Ft. Walton Beach, Panama City, Tallahassee (Escambia, Santa Rosa, Okaloosa, Walton, Bay, Leon & Gadsden Counties)

Production Staff

Lead Researcher and Analyst:
Dr. Wayne R. Archer, Director
University of Florida Bergstrom Center for Real Estate Studies
Professor of Real Estate and Wachovia Fellow,
Warrington College of Business Administration

Survey Research Analyst & Designer:
Scott Richards, M.A., Research Analyst,
UF Bureau of Economic & Business Research

Survey Website Design & Support:
ITSP Web, Data & Communication Services,
Warrington College of Business Administration

Graduate Student Production Assistants:
Ben Scheick, PhD student
Patrick Boileau, MSRE Class of 2007
Dan Carlson, MSRE Class of 2007

Participating Organizations


College Info

Warrington College of Business Administration
100 BRY
PO Box 117150
Gainesville, FL 32611-7150
Phone: 352.392.2397
Fax: 352.392.2086

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